The story, always put out in the Uk, was that if you worked for he good of the country and your neighbours then when your retired you got your reward with a Gold plated pension based on your final years salary as opposed to an annual portion of whatever had been invested into your private pension, if you actually had one. If your employers, over your working life, did not have a pension scheme, then you could start up your own which, as it all turned out, was the better bet rather than a company one, in most cases. The companies which you worked for were considered to be the owners of the pension and could borrow the whole pot to put in the business. Many, put it into the business, loaned it to directors and robbed the scheme, legally, by not paying back the loans !!!!
it the pension pot was loaned out it did not make any money from investments and did not grow. Contributions were just being flung into a black hole. the company, borrowing the pension money, without a vote by the contributors, was supposed to pay it back with the interest that it should have accrued. they rarely did. instead they just went out of business to start up the next day in the same place. The new company could buy the stock from the old one for pennies in the pound and not have to repay anything.
A furniture company, Land of Lather became Latherland, overnight and had morphed several times over, until the directors, eventually, retired very rich indeed. They were classics and it was all done legally !!!!
There game was to buy huge amounts of stock on long term payment deals, punt it out the door, quickly, get the sales income from the finance lenders, all before they had to pay suppliers. Pay a little bit and order more stuff. Suppliers would take on more workers to fill the orders, borrow more money to enlarge their firms and only get a small amount of payment back. Rent for huge showrooms was paid, a little at a time, to stop them being evicted.Huge adverts on TV and in newspapers would be placed via agencies who got a little payment, now and again, to stop them sueing.They would pay some VAT to keep the Customs sweet. Everything was legal. If any debtor got stroppy they would be told, quietly, over an expensive lunch, to shut or the firm would just close and they would get nothing or that they would just find another supplier and the first firm could spend a fortune on lawyers and Court cases. Eggs in one basket, Economic Law.They claimed that, although stuff was flying out the doors, the profit margins were small. Monies were being paid, but not, ever, full amounts so suppliers made a loss all the time!!!!
When they received their annual tax bill and the rent was in arrears, they would place a mega order. Then close the doors. Start a new company.Buy the new stock for pennies, from the old company and begin again, in the same stores, under new rent deals. It was very clever, but very obvious. Of course, unit profits were lower than other retailers, but they made it up by moving bulk. They made more money by not paying the full amounts owed. They only made part payments, very late.It was a gravy train. everybody wanted in on this huge mover of stuff. They expanded from suites, to beds, to carpets, to soft furnishings, everything to sit on or lie on.!!! All bought in India, China and Italy at bulk order knock down prices. it was a type of ponzi scheme.It was all legal!!!
Eventually it became a joke. The question was , who are Latherland today? Foreign suppliers didn't know what was going on in far away UK. They had a great buyer, the owners so Lire, Rupees, Yuans rolling in for the future. The view from the hill was good. Then they all rolled off, at very high speed. Suppliers had borrowed to the hilt to expand, to produce stuff, that they never got full or any payment for. Advertising agencies got stuck with huge bills from TV and newspapers, which they couldn't pay, as they had not been paid or paid very little.The taxman got nothing. nation Insurance contributions were late if paid at all, but were deducted every week as was the income tax. That money gained interest for the companies and they didn't put it in. The companies portion of the National Insurance could be borrowed back out again.!!!!
With permission of Directors, interest free loans could be made by the company to directors, their wives, their children, their Grannies their dog and cat and never paid back!!! They were used to buy houses, mainly.
It was wonderful to watch.!!!
I changed the names, slightly, to avoid having m'learned friends, try to sue me, for giving it all away!!!
No comments:
Post a Comment